Educational Finance in Thailand - UNESCO Bangkok

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Final Report, Volume II/3 Anthony. Cresswell: Educational Finance UNESCO-PROAP TA 2996-THA Education Management and Finance Study July 1999 10.4.3. School performance and financial allocations The allocation mechanisms for providing resources for education programs should be separate from the administrative and management mechanisms for ensuring efficient and effective performance of school staff. It is, of course both feasible and appropriate to create financial incentives for teachers and administrators to improve their performance, or to provide sanctions for the same teachers and administrators for ineffective or improper performance. But the incentives or sanctions must be targeted at individual teachers or administrators, not at the levels of support for the programs themselves. It is therefore inappropriate and ultimately unworkable to link budgets for programs to the performance of the students in those programs in such a way that punishes students for ineffective teaching or administration. Reducing the budget for any schools with low performance indicators, as some current proposals recommend, should not be part of the finance system at all. Instead, incentives and/or sanctions for inadequately performing school staff should be part of the educational management structure. 10.5. Higher education financing 10.5.1. Level of subsidy a. The overall subsidy of higher education should be reduced. The current subsidy ratio of over 90 % of the direct costs of higher education cannot be defended on either efficiency or equity grounds. Estimates from OECD countries are available, for both centralized and decentralized systems. For the mostly decentralized OECD countries 7 , the public expenditure on higher education is approximately two-thirds of the total. For the same countries, as well as the mostly centralized countries 8 , the ratio of expenditure on higher education relative to lower education is less approximately 2:1. This latter proportion reflects much higher participation rates of upper secondary education in the OECD countries than in Thailand. So a somewhat higher ratio may be a more reasonable short-range goal. Overall, however, these levels of support and subsidy seem like reasonable longer-term policy goals for Thailand. b. Achieving such policy goals would mean very substantial shifts in the overall funding of higher education. It is quite likely that the costs to students and families for higher education could increase by a factor of five or more. Such higher fees would effectively bar poor students from higher education and place a much greater burden on middle income families. Therefore a substantial expansion of income-based financial aid should be made available to students. This is could be based on an expansion and further development of the student loan scheme discussed in a separate report. Scholarships for able poor students 7 These countries are Australia, Canada, Germany, Japan, Switzerland, U.K. and U.S. (OECD Indicators, 1997). 8 These countries are Austria, Belgium, France, Ireland, Italy, Luxembourg, Netherlands, and Portugal. (OECD Indicators, 1997). 20
Final Report, Volume II/3 Anthony. Cresswell: Educational Finance UNESCO-PROAP TA 2996-THA Education Management and Finance Study July 1999 should also be developed. In addition, it would be necessary to phase-in over a 5- 10 year period the shift of costs under this recommendation. 10.5.2. Cost recovery and private contributions The arrangements for the financing of higher education should be shifted to depend on greater private contributions to the cost of the programs, and mechanisms for cost recovery wherever feasible. Subsidy rates in the range of one-third to two thirds of the programmatic costs of higher education would be in line with the policies in many developed and some developing countries. For the non-programmatic costs (room, board, incidentals), subsidy rates should be much lower or eliminated. This would require large increases in tuition rates and other sources of revenue to replace the reduced government subsidies. The existing loan and scholarship programs are functional and could be increased to maintain educational opportunity for lower income students. 10.5.3. Administration of financial autonomy If the individual campuses are to make best use of the financial autonomy to be granted, they will need a financial information system to support decision making. Such systems should be based on the same sort of uniform accounting structure and generally accepted accounting practices as are developed for the local education authorities, but adapted to the needs of the various sized and types of higher education institutions in Thailand. This both a technical and in greater part a human resource and organization problem, requiring new organizational structures and human resources to engage in effective financial management in the new environment. These training and organizational concerns should be part of the overall implementation plans for financial reforms. 10.6. Implementation Issues 10.6.1. Transparency and allocation policy deliberations The system described here uses formulas and standard amounts as the basis for allocation policy. Therefore the policy dialog on educational resource allocation can focus on these formulas and standards as the main content of policy. The basis for decisions is open to review and encourages the participation of relevant stakeholders in the deliberative processes and can solidify support for policies so derived. 10.6.2. Alternative finance system structure: charter school service areas New policy should be formulated to provide a mechanism through which local governments could create alternative finance and administrative mechanisms that better fit local conditions. That mechanism would require new legislation allowing for the creation of a new kind of government unit for providing basic education: a charter school service area. The charter, developed locally, would describe the means for finance and governance of the area, including taxation and decision making processes. If ratified by the provincial and central government, the charter 21
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mission and operations. The term
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The information requirements for fi
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Table 1: Continued Dept. Flow of Re
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Table 1: Continued Dept. Flow of Re
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Description and assessment of compu
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Table 3: Existing computer systems
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Table 3: Continued Current existing
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Description of flows of financial i
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(teachers, facilities, etc) if data
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Table 4: Continued. Content of curr
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Table 5: Assessment of information
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An assessment of information system
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general administration, these syste
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Recommendation for IS Most involved
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6. The nation wide implementation.
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References Office of the permanent
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Office of private education commiss
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Interviews 10 September 1998, 9:00-
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Appendix 2 Projections of Costs of
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Projected Cost Increases for Expand
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Identification of Schools for Sampl
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8. Please place an X in a box below
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enrollment as a whole growing at an
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Figure 1: Thailand’s Development
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Table 5: Crude transition rates of
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and level of education, 1993 and 19
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2.31 Questionable quality of educat
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income inequality between agricultu
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4.1.4. The percentages calculated f
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Table 11: Public and Private sector
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4.3.8. As would be expected, unempl
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5.7 The dilemma is to balance the s
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Table 14: Unemployment and Underemp
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there any activities that would be
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References Chalongphob Sussangkarn
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Appendix 6 BMA Voucher Policy A. Lo
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Appendix 7 Finance Allocation Metho
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Appendix 8 Program Structure of the
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Not all possible flows are show, si
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Appendix 11 Results of Regression A
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Educational Finance in Thailand - UNESCO Bangkok

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